<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
Commission File Number 0-25370
RENT-A-CENTER, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 48-1024367
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5700 Tennyson Parkway, Third Floor
Plano, Texas 75024
(972) 801-1100
(Address, including zip code, and telephone
number, including area code, of registrant's
principal executive offices)
NONE
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of July 31, 2000:
<TABLE>
<S> <C>
Class Outstanding
------------------------------------------------ ------------------
Common stock, $.01 par value per share 24,356,059
</TABLE>
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of June 30, 2000 and December 31, 1999 3
Consolidated Statements of Earnings for the six months ended 4
June 30, 2000 and 1999
Consolidated Statements of Earnings for the three months ended 5
June 30, 2000 and 1999
Consolidated Statements of Cash Flows for the six months ended 6
June 30, 2000 and 1999
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition 9
and Results of Operations
Item 3. Quantitative and Qualitative Disclosure About Market Risk 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURES
Exhibit 27.1
</TABLE>
2
<PAGE> 3
RENT-A-CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(In Thousands of Dollars) June 30, December 31,
2000 1999
--------------- ---------------
Unaudited
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 49,242 $ 21,679
Rental merchandise, net
On rent 466,779 425,469
Held for rent 116,428 105,754
Accounts receivable - trade 1,866 3,883
Prepaid expenses and other assets 44,366 27,867
Property assets, net 81,522 82,657
Deferred income taxes 75,544 110,367
Intangible assets, net 697,827 707,324
--------------- ---------------
$ 1,533,574 $ 1,485,000
=============== ===============
LIABILITIES
Senior debt $ 664,822 $ 672,160
Subordinated notes payable 175,000 175,000
Accounts payable - trade 33,763 53,452
Accrued liabilities 126,366 106,796
--------------- ---------------
999,951 1,007,408
COMMITMENTS AND CONTINGENCIES -- --
PREFERRED STOCK
Redeemable convertible voting preferred stock, net of
placement costs, $.01 par value; 5,000,000 shares authorized;
276,547 and 271,426 shares issued and outstanding in 2000
and 1999, respectively 276,022 270,902
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; 50,000,000 shares authorized;
25,332,383 and 25,297,458 shares issued in 2000 and 1999,
respectively 253 253
Additional paid-in capital 106,082 105,627
Retained earnings 176,266 125,810
--------------- ---------------
282,601 231,690
Treasury stock, 990,099 shares at cost in 2000 and 1999 (25,000) (25,000)
--------------- ---------------
257,601 206,690
--------------- ---------------
$ 1,533,574 $ 1,485,000
=============== ===============
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
RENT-A-CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
(In Thousands of Dollars, except per share data) Six months ended June 30,
---------------------------
2000 1999
------------ ------------
<S> <C> <C>
Revenues Unaudited
Store
Rentals and fees $ 710,547 $ 617,866
Merchandise sales 45,019 52,179
Other 994 1,320
Franchise
Merchandise sales 25,212 21,821
Royalty income and fees 2,999 2,932
------------ ------------
784,771 696,118
Operating expenses
Direct store expenses
Depreciation of rental merchandise 145,531 130,904
Cost of merchandise sold 37,396 43,338
Salaries and other expenses 419,846 378,112
Franchise cost of merchandise sold 24,234 21,177
------------ ------------
627,007 573,531
General and administrative expenses 23,481 21,851
Amortization of intangibles 13,930 13,246
Class action litigation settlements (22,383) --
------------ ------------
Total operating expenses 642,035 608,628
Operating profit 142,736 87,490
Interest expense 37,369 37,507
Interest income (374) (336)
------------ ------------
Earnings before income taxes 105,741 50,319
Income tax expense 50,231 24,401
------------ ------------
NET EARNINGS 55,510 25,918
Preferred dividends 5,133 4,931
------------ ------------
Net earnings allocable to common stockholders $ 50,377 $ 20,987
============ ============
Basic earnings per common share $ 2.07 $ 0.87
============ ============
Diluted earnings per common share $ 1.62 $ 0.76
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
RENT-A-CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
(In Thousands of Dollars, except per share data) Three months ended June 30,
------------------------------
2000 1999
------------ ------------
Revenues Unaudited
<S> <C> <C>
Store
Rentals and fees $ 360,227 $ 316,159
Merchandise sales 17,680 20,293
Other 502 462
Franchise
Merchandise sales 12,321 13,000
Royalty income and fees 1,515 1,507
------------ ------------
392,245 351,421
Operating expenses
Direct store expenses
Depreciation of rental merchandise 73,803 66,438
Cost of merchandise sold 14,566 17,422
Salaries and other expenses 211,321 191,682
Franchise cost of merchandise sold 11,793 12,635
------------ ------------
311,483 288,177
General and administrative expenses 12,006 10,600
Amortization of intangibles 6,955 6,856
Class action litigation settlements (22,383) --
------------ ------------
Total operating expenses 308,061 305,633
Operating profit 84,184 45,788
Interest expense 18,361 18,865
Interest income (117) (50)
------------ ------------
Earnings before income taxes 65,940 26,973
Income tax expense 31,319 13,082
------------ ------------
NET EARNINGS 34,621 13,891
Preferred dividends 2,579 2,490
------------ ------------
Net earnings allocable to common stockholders $ 32,042 $ 11,401
============ ============
Basic earnings per common share $ 1.32 $ 0.47
============ ============
Diluted earnings per common share $ 1.00 $ 0.41
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
RENT-A-CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six months ended June 30,
--------------------------------
(In Thousands of Dollars) 2000 1999
------------ ------------
Unaudited
<S> <C> <C>
Cash flows from operating activities
Net earnings $ 55,510 $ 25,918
Adjustments to reconcile net earnings to net cash provided
by (used in) operating activities
Depreciation of rental merchandise 145,531 130,904
Depreciation of property assets 16,353 15,412
Amortization of intangibles 13,930 13,246
Amortization of financing fees 1,319 1,304
Changes in operating assets and liabilities, net of effects of
acquisitions
Rental merchandise (189,022) (178,820)
Accounts receivable - trade 2,017 288
Prepaid expenses and other assets (3,916) 1,312
Deferred income taxes 34,823 24,401
Accounts payable - trade (19,688) 5,510
Accrued liabilities 19,518 (41,427)
------------ ------------
Net cash provided by (used in) operating activities 76,375 (1,952)
------------ ------------
Cash flows from investing activities
Purchase of property assets (15,353) (15,586)
Proceeds from sale of property assets 418 1,219
Acquisitions of businesses, net of cash acquired (26,994) --
------------ ------------
Net cash used in investing activities (41,929) (14,367)
------------ ------------
Cash flows from financing activities
Exercise of stock options 455 3,109
Proceeds from debt 207,480 100,412
Repayments of debt (214,818) (106,455)
------------ ------------
Net cash used in financing activities (6,883) (2,934)
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 27,563 (19,253)
Cash and cash equivalents at beginning of period 21,679 33,797
------------ ------------
Cash and cash equivalents at end of period $ 49,242 $ 14,544
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The interim financial statements of Rent-A-Center, Inc. included herein
have been prepared by us pursuant to the rules and regulations of the
Securities and Exchange Commission. Some of the information and
footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the Commission's rules and
regulations, although we believe that the disclosures are adequate to
make the information presented not misleading. It is suggested that
these financial statements be read in conjunction with the financial
statements and notes included in our Annual Report on Form 10-K for the
year ended December 31, 1999, and our Quarterly Report on Form 10-Q for
the three months ended March 31, 2000. In our opinion, the accompanying
unaudited interim financial statements contain all adjustments,
consisting only of those of a normal recurring nature, necessary to
present fairly our results of operations and cash flows for the periods
presented. The results of operations for the periods presented are not
necessarily indicative of the results to be expected for the full year.
2. EARNINGS PER SHARE
Basic and diluted earnings per common share is computed based on the
following information:
<TABLE>
<CAPTION>
(In Thousands, except per share data) Three months ended June 30, 2000
--------------------------------------------------
Net earnings Shares Per share
------------ ---------- ----------
<S> <C> <C> <C>
Basic earnings per common share $ 32,042 24,326 $ 1.32
Effect of dilutive stock options -- 319
Effect of preferred dividend 2,579 9,900
---------- ----------
Diluted earnings per common share $ 34,621 34,545 $ 1.00
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
(In Thousands, except for per share data) Three months ended June 30, 1999
--------------------------------------------------
Net earnings Shares Per share
------------ ----------
<S> <C> <C> <C>
Basic earnings per common share $ 11,401 24,200 $ 0.47
Effect of dilutive stock options -- 404
Effect of preferred dividend 2,490 9,536
---------- ----------
Diluted earnings per common share $ 13,891 34,140 $ 0.41
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
(In Thousands, except for per share data) Six months ended June 30, 2000
--------------------------------------------------
Net earnings Shares Per share
------------ ---------- ----------
<S> <C> <C> <C>
Basic earnings per common share $ 50,377 24,319 $ 2.07
Effect of dilutive stock options -- 172
Effect of preferred dividend 5,133 9,854
---------- ----------
Diluted earnings per common share $ 55,510 34,345 $ 1.62
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
(In Thousands, except for per share data) Six months ended June 30, 1999
--------------------------------------------------
Net earnings Shares Per share
------------ ---------- ----------
<S> <C> <C> <C>
Basic earnings per common share $ 20,987 24,158 $ 0.87
Effect of dilutive stock options -- 463
Effect of preferred dividend 4,931 9,493
---------- ----------
Diluted earnings per common share $ 25,918 34,114 $ 0.76
========== ========== ==========
</TABLE>
7
<PAGE> 8
3. SUBSIDIARY GUARANTORS
Under our indenture governing the terms of our subordinated notes, our
direct and wholly owned subsidiaries, ColorTyme, Inc. and Advantage
Companies, Inc., have fully, jointly and severally, and unconditionally
guaranteed our obligations under the notes. We have one indirect
subsidiary that is not a guarantor of the notes because it is
inconsequential. There are no restrictions on any of the guarantors to
transfer funds to us in the forms of loans, advances or dividends,
except as provided by applicable law.
The following summarized financial information includes ColorTyme, Inc.
and Advantage Companies, Inc. on a combined basis. Separate financial
statements and other disclosures concerning the guarantors have not
been included because management believes that they are not material to
investors.
<TABLE>
<CAPTION>
Parent Subsidiary
Company Guarantors Eliminations Consolidated
---------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
(In Thousands of Dollars)
Balance Sheet Data:
June 30, 2000
Rental merchandise, net $ 583,207 $ -- $ -- $ 583,207
Intangible assets, net 334,493 363,334 -- 697,827
Total assets 1,208,872 373,984 (14,459) 1,568,397
Total debt 664,822 -- -- 664,822
Total liabilities 1,031,613 3,161 -- 1,034,774
December 31, 1999
Rental merchandise, net $ 531,223 $ -- $ -- $ 531,223
Intangible assets, net 337,486 369,838 -- 707,324
Total assets 1,119,360 380,099 (14,459) 1,485,000
Total debt 672,160 -- -- 672,160
Total liabilities 1,002,890 4,518 -- 1,007,408
Statements of Earnings Data:
For the six months ended June 30, 2000
Total revenues $ 756,560 $ 28,211 $ -- $ 784,771
Direct store expenses 602,773 -- -- 602,773
Franchise cost of merchandise sold -- 24,234 -- 24,234
Net earnings (loss) 60,269 (4,759) -- 55,510
For the six months ended June 30, 1999
Total revenues $ 671,365 $ 24,753 $ -- $ 696,118
Direct store expenses 552,354 -- -- 552,354
Franchise cost of merchandise sold -- 21,177 -- 21,177
Net earnings (loss) 31,081 (5,163) -- 25,918
For the three months ended June 30, 2000
Total revenues $ 378,391 $ 13,854 $ -- $ 392,245
Direct store expenses 299,690 -- -- 299,690
Franchise cost of merchandise sold -- 11,793 -- 11,793
Net earnings (loss) 36,974 (2,353) -- 34,621
For the three months ended June 30, 1999
Total revenues $ 336,915 $ 14,506 $ -- $ 351,421
Direct store expenses 275,542 -- -- 275,542
Franchise cost of merchandise sold -- 12,635 -- 12,635
Net earnings (loss) 16,489 (2,598) -- 13,891
</TABLE>
8
<PAGE> 9
4. PREFERRED STOCK DIVIDENDS
On May 31, 2000 we paid a 3.75% dividend on our redeemable convertible
voting preferred stock. This dividend was paid through the issuance of
2,554 shares of in-kind preferred stock to holders of record on March
31, 2000.
5. CLASS ACTION LITIGATION SETTLEMENTS
In December 1991, January 1996, and November 1997, we were served with three
class action lawsuits in New Jersey. The details of these individual cases were
fully described in the Legal Proceedings section of our Annual Report on Form
10-K for the year ended December 31, 1999. We settled these matters in principle
in December 1998 for approximately $60.0 million less certain amounts to be
refunded to us based on unlocated class members. We assumed one of these matters
pursuant to the Thorn Americas acquisition, and appropriate accounting
adjustments were made by Thorn Americas for such contingent liabilities. In the
fourth quarter of 1998, we recognized an $11.5 million charge as a class action
litigation settlement for the other two matters. Under the terms of the
settlement, we were entitled to receive refunds for unlocated class members. As
of June 30, 2000, we had received refunds totaling approximately $22.4 million.
These refunds are presented in the three months ended June 30, 2000 as a class
action litigation settlement gain.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
This report contains forward-looking statements that involve risks and
uncertainties. Forward-looking statements generally can be identified by the use
of forward-looking terminology such as "may," "will," "expect," "intend,"
"estimate," "anticipate" or "believe." We believe that the expectations
reflected in these forward-looking statements are accurate. However, we cannot
assure you that these expectations will occur. Our actual future performance
could differ materially from such statements. Factors that could cause or
contribute to these differences include, but are not limited to:
o our ability to acquire additional rent-to-own stores on favorable
terms;
o our ability to enhance the performance of these acquired stores;
o uncertainties regarding the ability to open new stores;
o the passage of legislation adversely affecting the rent-to-own
industry;
o interest rates;
o our ability to collect on our rental purchase agreements at the current
rate; and
o the other risks detailed from time to time in our SEC reports.
You should not unduly rely on these forward-looking statements, which speak only
as of the date of this report. Except as required by law, we are not obligated
to publicly release any revisions to these forward-looking statements to reflect
events or circumstances occurring after the date of this report or to reflect
the occurrence of unanticipated events. Important factors that could cause our
actual results to differ materially from our expectations are discussed under
Risk Factors in our Annual Report on Form 10-K for our fiscal year ended
December 31, 1999. All subsequent written and oral forward-looking statements
attributable to us, or persons acting on our behalf, are expressly qualified in
their entirety by the statements in those sections.
9
<PAGE> 10
OUR BUSINESS
We are the largest operator in the United States rent-to-own industry with an
approximate 26% market share based on store count. At June 30, 2000, we operated
2,092 company-owned stores and had 353 franchised stores, providing high quality
durable goods in 50 states, the District of Columbia and Puerto Rico.
We have pursued an aggressive growth strategy since we were acquired in 1989 by
J. Ernest Talley, our Chairman of the Board and Chief Executive Officer. We have
sought to acquire under-performing stores to which we could apply our operating
strategies. The acquired stores benefit from our administrative network,
improved product mix, sophisticated management information systems and the
greater purchasing power of a larger organization. Since May 1993, our store
base has grown from 27 to 2,092 primarily through acquisitions. During this
period, we acquired over 2,000 company-owned stores and over 300 franchised
stores in more than 60 separate transactions, including six transactions where
we acquired in excess of 70 stores. As a result, we have gained significant
experience in the acquisition and integration of other rent-to-own operators and
believe that the fragmented nature of the industry will result in ongoing growth
opportunities.
RECENT DEVELOPMENTS
In June, 2000, we began offering Internet access to our customers through
RentACenter.com. Unlike traditional internet service providers, this Internet
service is available to customers on a weekly basis with no long-term
commitment. Service is paid for at any of our stores across the country without
the need for a credit card or a checking account. We believe that this new
service is the only one of its kind and could establish RentACenter.com as the
leading ISP for those who may be unable to obtain Internet service through
existing market participants like America Online. Access to the Internet through
RentACenter.com is available to everyone where local service is available, and
not limited to customers that have a computer or other item on rent from us. For
a price of $5.99 per week, customers receive unlimited hours and access to the
Internet. In addition, RentACenter.com provides complimentary services including
e-mail, personal web space, access to shopping, chat rooms, games and more. We
believe our weekly Internet service will open the door for thousands of middle
and lower income households to gain access to the World Wide Web.
During 2000, we resumed our strategy of increasing our store base and annual
revenues and profits through acquisitions. During the second quarter of 2000, we
acquired 30 stores for approximately $24.7 million in cash in three separate
transactions, for a total of 35 acquired stores for the first six months of
2000. As of the date of this report, we have acquired a further 21 stores for
approximately $8.9 million in cash in four separate transactions during the
third quarter of 2000. We believe that there are tremendous opportunities to
expand our presence in the rent-to-own industry. We have been working over the
past few months to develop an acquisition pipeline, as well as target specific
sites for new store locations. As a result of these efforts, together with the
refinancing of a portion of our debt, we believe that we will be able to
complete our goal of adding a total of 100 to 150 stores to our store base in
2000.
On June 29, 2000, we refinanced a portion of our senior credit facility. Through
a syndicated bank offering led by Chase Securities, Inc., we were provided with
a new $125 million Term D tranche to our existing facility. No significant
mandatory principal repayments are required on the Term D facility until the
tranche becomes due in 2007. Borrowings under the Term D facility bear interest
at 1.75% over the designated prime rate (9.50% at June 30, 2000) or 2.75% over
LIBOR (6.69% at June 30, 2000) at our option. Approximately $89 million of the
proceeds were used to repay our existing Term A tranche of the facility, which
required significant principal repayments over the next four years. As a result
of this refinancing, our mandatory principal repayments for the next four years
have been significantly curtailed, enabling us to more efficiently deploy our
capital to fund our store expansion plans through internally generated cashflow.
10
<PAGE> 11
RESULTS OF OPERATIONS
COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
Total revenue increased by $88.7 million, or 12.7%, to $784.8 million for 2000
from $696.1 million for 1999. The increase in total revenue is directly
attributable to our focus of ensuring a successful integration of the stores
acquired from Central Rents and Thorn Americas. This focus resulted in same
store revenues increasing by $85.1 million, or 13.3 to $724.6 million for 2000
from $639.5 million in 1999. Same store revenues represent those revenues earned
in stores that were operated by us for the entire six-month periods ending June
30, 2000 and 1999. This improvement was primarily attributable to an increase in
both the number of items on rent and in revenue earned per item on rent.
Depreciation of rental merchandise increased by $14.6 million, or 11.2%, to
$145.5 million for 2000 from $130.9 million for 1999. Depreciation of rental
merchandise expressed as a percent of store rentals and fee revenue decreased
from 21.2% in 1999 to 20.5% in 2000. This decrease is primarily attributable to
the stores acquired from Central Rents and Thorn Americas experiencing
depreciation rates of 22.9% and 29.8%, respectively, upon their acquisition in
1998. These rates have decreased following the implementation of our pricing
strategies and inventory management practices.
Salaries and other expenses expressed as a percentage of total store revenue
decreased to 55.5% for 2000 from 56.3% for 1999. General and administrative
expenses expressed as a percent of total revenue decreased from 3.1% in 1999 to
3.0% in 2000.
Operating profit, before the pre-tax non-recurring class action litigation
settlement refund of $22.4 million, increased by $32.9 million, or 37.6%, to
$120.4 million for 2000 from $87.5 million for 1999, and as a percentage of
total revenue increased to 15.3% in 2000 from 12.6% in 1999. The increases are
attributable to the improved profitability in the stores acquired from Central
Rents and Thorn Americas. Including the class action litigation settlement
refund, operating profit was $142.7 million in 2000.
Net earnings, before the after-tax effect of the class action litigation
settlement refund, increased by $17.8 million, or 68.8%, to $43.8 million in
2000 from $25.9 million in 1999, due to the improved profitability of the
acquired stores as referred to above. Net earnings were $55.5 million in 2000
after the settlement refund.
COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999
Total revenue increased by $40.8 million, or 11.6%, to $392.2 million for 2000
from $351.4 million for 1999. The increase in total revenue is directly
attributable to our focus of ensuring a successful integration of the stores
acquired from Central Rents and Thorn Americas. This focus resulted in same
store revenues increasing by $40.2 million, or 12.2%, to $368.5 million for 2000
from $328.3 million in 1999. Same store revenues represent those revenues earned
in stores that were operated by us for the entire three-month period ending June
30, 2000 and 1999. This improvement was primarily attributable to an increase in
both the number of items on rent and in revenue earned per unit on rent.
Depreciation of rental merchandise increased by $7.4 million, or 11.1%, to $73.8
million for 2000 from $66.4 million for 1999. Depreciation of rental merchandise
as a percent of store rentals and fee revenue decreased to 20.5% for 2000 from
21.0% for 1999. This decrease is primarily attributable to the stores acquired
from Central Rents and Thorn Americas experiencing depreciation rates of 22.9%
and 29.8%, respectively, upon their acquisition in 1998. These rates have
decreased following the implementation of our pricing strategies and inventory
management practices.
Salaries and other expenses as a percentage of total store revenue decreased to
55.8% for 2000 from 56.9% for 1999. General and administrative expenses
expressed as a percentage of total revenue increased from 3.0% in 1999 to 3.1%
in 2000.
Operating profit, before a pre-tax non-recurring class action litigation
settlement refund of $22.4 million, increased by $16.0 million, or 35.0%, to
$61.8 million for 2000 from $45.8 million for 1999, and as a percentage of total
revenue increased to 15.8% in 2000 from 13.0% in 1999. This increase is
attributable to the improved profitability in the stores acquired from Central
Rents and Thorn Americas. Including the class action litigation settlement
refund, operating profit was $84.2 million in 2000.
11
<PAGE> 12
Net earnings, before the after-tax effect of the class action litigation
settlement refund, increased by $9.0 million, or 64.6%, to $22.9 million in 2000
from $13.9 million in 1999, due to the improved profitability of the acquired
stores as referred to above. Net earnings were $34.6 million in 2000 after the
settlement refund.
LIQUIDITY AND CAPITAL RESOURCES
Our primary liquidity requirements are for debt service under our senior credit
facility, the subordinated notes, other indebtedness outstanding, working
capital and capital expenditures. At June 30, 2000, we had in place an $809.9
million senior credit facility. The amounts outstanding under our senior credit
facility and our subordinated notes as of this date were approximately $664.8
million and $175.0 million, respectively.
We purchased $250.7 million of rental merchandise during the six months ended
June 30, 2000.
For the six months ended June 30, 2000, cash provided by operating activities
increased by $78.3 million, from $(2.0) million in 1999 to $76.4 million in
2000. This increase was primarily the result of the increased profitability of
the acquired Central Rents and Thorn Americas stores. Cash used in investing
activities increased by $27.6 million from $14.4 million in 1999 to $41.9
million in 2000. Cash used in financing activities increased by $3.9 million
from $2.9 million in 1999 to $6.9 million in 2000, primarily related to the
increased principal payments on our senior debt as compared to 1999.
Borrowings under the senior credit facility bear interest at varying rates equal
to 0.25% to 1.75% over the designated prime rate, which was 9.50% per annum at
June 30, 2000, or 1.25% to 2.75% over LIBOR, which was 6.69% at June 30, 2000,
at our option. At June 30, 2000, the average rate on outstanding borrowings was
8.87%. We have entered into certain interest rate protection agreements with two
banks. Under the terms of the interest rate agreements, the LIBOR rate used to
calculate the interest rate charged on $500.0 million of the outstanding senior
term debt has been fixed at an average rate of 5.59%. Individually, these
interest rate agreements have amounts of $250.0 million, $140.0 million, and
$110.0 million, and expire in September 2001, August 2003, and September 2003,
respectively. Borrowings are collateralized by a lien on substantially all of
our assets. A commitment fee equal to 0.25% to 0.50% of the unused portion of
the term loan facility is payable quarterly. The senior credit facility includes
certain net worth and fixed charge coverage requirements, as well as covenants
which restrict additional indebtedness and the disposition of assets not in the
ordinary course of business.
Principal and interest payments under the senior credit facility, the
subordinated notes, and other indebtedness represent significant liquidity
requirements for us. As of June 30, 2000, we owed approximately $839.8 million
under our various debt agreements and our subordinated notes. Under our various
debt agreements, we will be required to make minimum principal payments totaling
approximately $4.0 million in 2000, $14.6 million in 2001, 2002, and 2003, and
$47.9 million in 2004, plus applicable interest. Loans under the senior credit
facility not covered by interest rate swap agreements bear interest at floating
rates based upon the interest rate option selected by us.
Capital expenditures are made generally to maintain existing operations and for
new capital assets in new and acquired stores. We spent $15.4 million on capital
expenditures during the six months ended June 30, 2000, and expect to spend a
total of approximately $40.0 million on capital expenditures in the year ended
December 31, 2000.
We are continuing to focus our efforts on enhancing the operations and the depth
of management in the acquired stores. However, in 2000 we have also resumed our
strategy of increasing our store base and annual revenues and profits through
the opening of new stores, as well as through opportunistic acquisitions. As of
the date of this report, we have acquired 54 stores for $34.7 million in cash in
eight separate transactions during 2000. It is our intention to increase the
number of stores in which we operate by a total of 100 to 150 in 2000. We plan
to accomplish our future growth through selective and opportunistic
acquisitions, with an increasing emphasis on new store development. Typically, a
newly opened store is profitable on a monthly basis in the sixth to seventh
month after its initial opening. Historically, a typical store has achieved
break-even profitability in 12 to 15 months after its initial opening. Total
financing requirements of a typical new store approximates $0.4 million, with
roughly 80% to 85% of that amount relating to the purchase of rental merchandise
inventory. Historically, a newly opened store has achieved results consistent
with other stores that have been operating within our system for greater than
two years
12
<PAGE> 13
by the end of its third year of operation. There can be no assurance that we
will open any new stores in the future, or as to the number, location or
profitability thereof.
We believe that the cashflow generated from operations, together with amounts
available under our senior credit facility, will be sufficient to fund our debt
service requirements, working capital needs, capital expenditures, litigation
costs, and our store expansion intentions during 2000. At June 30, 2000, we had
$111.3 million available under our various debt agreements.
In addition, to provide any additional funds necessary for the continued pursuit
of our operating and growth strategies, we may incur from time to time
additional short or long-term bank indebtedness and may issue, in public or
private transactions, equity and debt securities. The availability and
attractiveness of any outside sources of financing will depend on a number of
factors, some of which will relate to our financial condition and performance,
and some of which will be beyond our control, such as prevailing interest rates
and general economic conditions. There can be no assurance additional financing
will be available, or if available, will be on terms acceptable to us.
EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS
SFAS No. 133, and its amendments, Accounting for Derivative Instruments and
Hedging Activities, establishes accounting and reporting standards requiring
that derivative instruments, including certain derivative instruments imbedded
in other contracts, be recorded in the balance sheet as either an asset or a
liability at its fair value. These statements also require that changes in the
derivative's fair value be recognized in earnings unless specific hedge
accounting criteria are met. We will adopt SFAS 133 and its amendments no later
than the first quarter of 2001. These statements are not expected to have a
material impact on our consolidated financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
INTEREST RATE SENSITIVITY
As of June 30, 2000, we had $175.0 million in subordinated notes outstanding at
a fixed interest rate of 11.0%. At this date, we also had $617.1 million in term
loans outstanding and $47.8 million outstanding under a multi-draw facility
indexed to the LIBOR rate. The subordinated notes mature on August 15, 2008 and
have a fixed interest rate of 11.0%. The fair value of the subordinated notes is
estimated based on discounted cash flow analysis using interest rates currently
offered for loans with similar terms to borrowers of similar credit quality. The
fair value of the subordinated notes at June 30, 2000 was $169.8 million, which
is $5.2 million below their carrying value. Unlike the subordinated notes, the
$617.1 million in term loans and the $47.8 million outstanding under a
multi-draw facility have variable interest rates indexed to current LIBOR rates.
We entered into $500.0 million in interest rate swap agreements that lock in a
LIBOR rate of 5.59%, hedging the risk of increased interest costs. Individually,
these interest rate agreements have amounts of $250.0 million, $140.0 million,
and $110.0 million, and expire in September 2001, August 2003, and September
2003, respectively. Given the current capital structure, including our interest
rate swap agreements, we have $164.8 million, or 19.6% of our total debt, in
variable rate debt. A hypothetical 1.0% change in the LIBOR rate would affect
pre-tax earnings by approximately $0.4 million for the three month period.
MARKET RISK
Market risk is the potential change in an instrument's value caused by
fluctuations in interest rates. Our primary market risk exposure is fluctuations
in interest rates. Monitoring and managing this risk is a continual process
carried out by the Board of Directors and senior management. We manage our
market risk based on an ongoing assessment of trends in interest rates and
economic developments, giving consideration to possible effects on both total
return and reported earnings.
13
<PAGE> 14
INTEREST RATE RISK
We hold long-term debt with variable interest rates indexed to prime or LIBOR
that exposes us to the risk of increased interest costs if interest rates rise.
To reduce the risk related to unfavorable interest rate movements, we have
entered into certain interest rate swap contracts on $500.0 million of debt to
pay a fixed rate of 5.59%.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we, along with our subsidiaries, are party to various legal
proceedings arising in the ordinary course of business. The majority of the
material proceedings involve claims that may be generally characterized into one
of two categories, recharacterization claims and statutory compliance claims.
Recharacterization claims generally involve claims:
o in states that do not have rent-to-own legislation;
o that rent-to-own transactions are disguised installment sales in
violation of applicable state installment statutes; and
o that allege greater damages.
Statutory compliance claims generally involve claims:
o in states that have rent-to-own legislation;
o that the operator failed to comply with applicable state rental
purchase statutes, such as notices and late fees; and
o that allege lesser damages.
Except as described below, we are not currently a party to any material
litigation.
Colon v. Thorn Americas, Inc. The plaintiffs filed this class action in November
1997 in New York state court. Thorn Americas removed the case to the U.S.
District Court for the Southern District of New York. Plaintiffs filed a motion
to remand, which was granted. The plaintiffs acknowledge that rent-to-own
transactions in New York are subject to the provisions of New York's Rental
Purchase Statute but contend the Rental Purchase Statute does not provide Thorn
Americas immunity from suit for other statutory violations. Plaintiffs allege
Thorn Americas has a duty to disclose effective interest under New York consumer
protection laws, and seek damages and injunctive relief for Thorn Americas'
failure to do so. In their prayers for relief, the plaintiffs have requested the
following:
o class certification;
o injunctive relief requiring Thorn Americas to (A) cease certain
marketing practices, (B) price their rental purchase contracts in
certain ways, and (C) disclose effective interest;
o unspecified compensatory and punitive damages;
o rescission of the class members contracts;
o an order placing in trust all moneys received by Thorn Americas in
connection with the rental of merchandise during the class period;
o treble damages, attorney's fees, filing fees and costs of suit;
o pre- and post-judgment interest; and
14
<PAGE> 15
o any further relief granted by the court.
This suit also alleges violations relating to late fees, harassment, undisclosed
charges, and the ease of use and accuracy of its payment records. The plaintiffs
did not specify a specific amount on their damages request.
The proposed class includes all New York residents who were party to Thorn
Americas' rent-to-own contracts from November 26, 1991 through November 26,
1997. We are vigorously defending this action and on September 24, 1998, filed
motions to deny class certification and dismiss the complaint. Plaintiff
responded and filed a motion for summary judgment asking the court to declare
that the transaction includes an undisclosed interest component. The court
denied our motion to dismiss and plaintiffs' motion for summary judgement on
August 24, 1999. Both sides are appealing the court's ruling to the Appellate
Division. Oral argument in the appeal occurred in June 2000 and the parties are
awaiting a decision. There can be no assurance that our position will prevail,
or that we will be found not to have any liability. This matter was assumed by
us pursuant to the Thorn Americas acquisition, and appropriate purchase
accounting adjustments were made for such contingent liabilities.
Murray v. Rent-A-Center, Inc. In May 1999, the plaintiffs filed a putative
nationwide class action in federal court in Missouri, alleging that we have
discriminated against African Americans in our hiring, compensation, promotion
and termination policies. Plaintiffs alleged no specific amount of damages in
their complaint. We have filed an answer in the matter denying plaintiffs'
allegations and intend to vigorously defend this action. Some discovery in this
litigation has occurred to date. Members of the regional class defined in our
completed settlement of the Allen v. Thorn Americas, Inc. litigation would not
be included in the Murray case. We believe plaintiffs' claims in this suit are
without merit. However, given the early stage of this proceeding, there can be
no assurance that we will be found to have no liability.
Robinson v. Thorn Americas, Inc., Gallagher v. Crown Leasing Corporation, and
Michelle Newhouse v. Rent-A-Center, Inc./Handy Boykin v. Rent-A-Center, Inc. In
December 1991, January 1996, and November 1997, respectively, we were served
with three class action lawsuits in New Jersey. The details of these individual
cases were fully described in the Legal Proceedings section of our Annual Report
on Form 10-K for the year ended December 31, 1999. The Robinson matter was
assumed by us pursuant to the Thorn Americas acquisition, and appropriate
purchase accounting adjustments were made for such contingent liabilities. All
three of these matters were settled in principle in December 1998 for
approximately $60.0 million less certain amounts to be refunded to us based on
unlocated class members, subject to preliminary and final approval of the court.
Final approval of the court occurred on October 13, 1999. As of June 30, 2000,
we had received refunds totaling approximately $22.4 million. We expect
additional refunds from a dispute resolution fund created with settlement
proceeds as class members and payment disputes are resolved. We estimate that
the additional refund will be less than $0.5 million.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At the Annual Meeting of Stockholders held on May 16, 2000, the nominees for
Class III directors were elected. The two Class III directors were elected by a
majority of our stockholders. The stockholders also approved certain amendments
to our Amended and Restated Long-Term Incentive Plan.
The voting for the directors was as follows:
<TABLE>
<CAPTION>
NOMINEE FOR WITHHELD
<S> <C> <C>
J.V. Lentell 30,798,652 642,707
Joseph V. Mariner 31,049,550 391,809
</TABLE>
The following are directors whose terms of office as a director continued after
the Annual Meeting of Stockholders:
L. Dowell Arnette Lawrence M. Berg
Peter P. Copses J. Ernest Talley
Mark E. Speese
15
<PAGE> 16
The voting to approve the amendments to our Amended and Restated Long-Term
Incentive Plan was as follows:
<TABLE>
<CAPTION>
FOR AGAINST WITHHELD
<S> <C> <C> <C>
21,892,757 8,081,444 4,011
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
CURRENT REPORTS ON FORM 8-K.
None.
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<S> <C>
2.1(1) -- Stock Purchase Agreement, dated as of June 16, 1998, among
Renters Choice, Inc., Thorn International BV and Thorn plc
(Pursuant to the rules of the Commission, the schedules and
exhibits have been omitted. Upon the request of the Commission,
the Company will supplementally supply such schedules and exhibits
to the Commission.)
3.1(2) -- Amended and Restated Certificate of Incorporation of Renters
Choice
3.2(3) -- Certificate of Amendment to the Amended and Restated
Certificate of Incorporation of Renters Choice
3.3(4) -- Amended and Restated Bylaws of Rent-A-Center
4.1(5) -- Form of Certificate evidencing Common Stock
4.2(6) -- Certificate of Designations, Preferences and Relative Rights
and Limitations of Series A Preferred Stock of Renters Choice,
Inc.
4.3(7) -- Certificate of Designations, Preferences and Relative Rights
and Limitations of Series B Preferred Stock of Renters Choice,
Inc.
4.4(8) -- Indenture, dated as of August 18, 1998, by and among Renters
Choice, Inc., as Issuer, ColorTyme, Inc. and Rent-A-Center, Inc.,
as Subsidiary Guarantors, and IBJ Schroder Bank & Trust Company,
as Trustee
4.5(9) -- Form of Certificate evidencing Series A Preferred Stock
4.6(10) -- Form of Exchange Note
4.7(11) -- First Supplemental Indenture, dated as of December 31, 1998, by
and among Renters Choice Inc., Rent-A-Center, Inc., ColorTyme,
Inc., Advantage Companies, Inc. and IBJ Schroder Bank & Trust
Company, as Trustee.
10.1(12) -- Amended and Restated 1994 Renters Choice, Inc. Long-Term
Incentive Plan
10.2(13) -- Credit Agreement, dated August 5, 1998, among Renters Choice,
Inc., Comerica Bank, as Documentation Agent, NationsBank N.A., as
Syndication Agent, and The Chase Manhattan Bank, as Administrative
Agent, and certain other lenders
10.3 (14) -- First Amendment, dated as of February 25, 2000, to the Credit
Agreement, dated August 5, 1998, among Rent-A-Center, Inc.
(formerly known as Renters Choice, Inc.), Comerica Bank, as
Documentation Agent, NationsBank N.A., as Syndication Agent, and
the Chase Manhattan Bank, as Administrative Agent, and certain
other lenders
10.4* -- Amended and Restated Credit Agreement, dated as of August 5,
1998 as Amended and Restated as of June 29, 2000, among
Rent-A-Center, Inc., Comerica Bank, as Documentation Agent, Bank
of America, NA, as Syndication Agent, and The Chase Manhattan
Bank, as Administration Agent
10.5(15) -- Guarantee and Collateral Agreement, dated August 5, 1998, made
by Renters Choice, Inc., and certain of its Subsidiaries in favor
of the Chase Manhattan Bank, as Administrative Agent
10.6(16) -- $175,000,000 Senior Subordinated Credit Agreement, dated as of
August 5, 1998, among Renters Choice, Inc., certain other lenders
and the Chase Manhattan Bank
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
10.7(17) -- Stockholders Agreement, dated as of August 5, 1998, by and
among Apollo Investment Fund IV, L.P., Apollo Overseas Partners
IV, L.P., J. Ernest Talley, Mark E. Speese, Renters Choice, Inc.,
and certain other persons
10.8(18) -- Agreements to be Bound to Stockholders Agreement, each dated
September 9, 1999, by and among Apollo Investment Fund IV, L.P.,
Apollo Overseas Partners IV, L.P., J. Ernest Talley, Mark E.
Speese, Rent-A-Center, Inc. and certain other persons.
10.9(19) -- Registration Rights Agreement, dated August 5, 1998, by and
between Renters Choice, Inc., Apollo Investment Fund IV, L.P., and
Apollo Overseas Partners IV, L.P., related to the Series A
Convertible Preferred Stock
10.10(20) -- Registration Rights Agreement, dated August 5, 1998, by and
between Renters Choice, Inc., Apollo Investment Fund IV, L.P., and
Apollo Overseas Partners IV, L.P., related to the Series B
Convertible Preferred Stock
10.11(21) -- Stock Purchase Agreement, dated August 5, 1998, among Renters
Choice, Inc., Apollo Investment Fund IV, L.P. and Apollo Overseas
Partners IV, L.P.
10.12(22) -- Exchange and Registration Rights Agreement, dated August 18,
1998, by and among Renters Choice, Inc. and Chase Securities Inc.,
Bear, Stearns & Co. Inc., NationsBanc Montgomery Securities LLC
and Credit Suisse First Boston Corporation
10.13(23) -- Employment Agreement, dated October 1, 1998, by and between
Rent-A-Center, Inc. and Bradley W. Denison
27.1* -- Financial Data Schedule
</TABLE>
----------
* Filed herewith.
(1) Incorporated herein by reference to Exhibit 2.9 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(2) Incorporated herein by reference to Exhibit 3.2 to the registrant's
Annual Report on Form 10-K for the year ended December 31, 1994
(3) Incorporated herein by reference to Exhibit 3.2 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1996
(4) Incorporated herein by reference to Exhibit 3.2 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1999
(5) Incorporated herein by reference to Exhibit 4.1 to the registrant's
Form S-4 filed on January 19, 1999.
(6) Incorporated herein by reference to Exhibit 4.2 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(7) Incorporated herein by reference to Exhibit 4.3 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(8) Incorporated herein by reference to Exhibit 4.4 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(9) Incorporated herein by reference to Exhibit 4.5 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(10) Incorporated herein by reference to Exhibit 4.6 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
17
<PAGE> 18
(11) Incorporated herein by reference to Exhibit 4.7 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(12) Incorporated herein by reference to Exhibit 99.1 to the registrant's
Registration Statement on Form S-8 (File No. 333- 40958)
(13) Incorporated herein by reference to Exhibit 10.18 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(14) Incorporated herein by reference to Exhibit 10.3 to the registrant's
Annual Report on Form 10-K for the year ended December 31, 1999
(15) Incorporated herein by reference to Exhibit 10.19 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(16) Incorporated herein by reference to Exhibit 10.20 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(17) Incorporated herein by reference to Exhibit 10.21 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(18) Incorporated herein by reference to Exhibit 10.7 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1998
(19) Incorporated herein by reference to Exhibit 10.22 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(20) Incorporated herein by reference to Exhibit 10.23 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(21) Incorporated herein by reference to Exhibit 2.10 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(22) Incorporated herein by reference to Exhibit 10.14 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(23) Incorporated herein by reference to Exhibit 10.15 to the registrant's
Annual Report on Form 10-K for the year ended December 31, 1998
----------
* Filed herewith.
18
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this Report to be signed on its behalf by the
undersigned duly authorized officer.
RENT-A-CENTER, INC.
By: /s/ Robert D. Davis
--------------------------------
Robert D. Davis
Senior Vice President-Finance
and Chief Financial Officer
Date: August 1, 2000
Rent-A-Center, Inc.
<PAGE> 20
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<S> <C>
2.1(1) -- Stock Purchase Agreement, dated as of June 16, 1998, among
Renters Choice, Inc., Thorn International BV and Thorn plc
(Pursuant to the rules of the Commission, the schedules and
exhibits have been omitted. Upon the request of the Commission,
the Company will supplementally supply such schedules and exhibits
to the Commission.)
3.1(2) -- Amended and Restated Certificate of Incorporation of Renters
Choice
3.2(3) -- Certificate of Amendment to the Amended and Restated
Certificate of Incorporation of Renters Choice
3.3(4) -- Amended and Restated Bylaws of Rent-A-Center
4.1(5) -- Form of Certificate evidencing Common Stock
4.2(6) -- Certificate of Designations, Preferences and Relative Rights
and Limitations of Series A Preferred Stock of Renters Choice,
Inc.
4.3(7) -- Certificate of Designations, Preferences and Relative Rights
and Limitations of Series B Preferred Stock of Renters Choice,
Inc.
4.4(8) -- Indenture, dated as of August 18, 1998, by and among Renters
Choice, Inc., as Issuer, ColorTyme, Inc. and Rent-A-Center, Inc.,
as Subsidiary Guarantors, and IBJ Schroder Bank & Trust Company,
as Trustee
4.5(9) -- Form of Certificate evidencing Series A Preferred Stock
4.6(10) -- Form of Exchange Note
4.7(11) -- First Supplemental Indenture, dated as of December 31, 1998, by
and among Renters Choice Inc., Rent-A-Center, Inc., ColorTyme,
Inc., Advantage Companies, Inc. and IBJ Schroder Bank & Trust
Company, as Trustee.
10.1(12) -- Amended and Restated 1994 Renters Choice, Inc. Long-Term
Incentive Plan
10.2(13) -- Credit Agreement, dated August 5, 1998, among Renters Choice,
Inc., Comerica Bank, as Documentation Agent, NationsBank N.A., as
Syndication Agent, and The Chase Manhattan Bank, as Administrative
Agent, and certain other lenders
10.3 (14) -- First Amendment, dated as of February 25, 2000, to the Credit
Agreement, dated August 5, 1998, among Rent-A-Center, Inc.
(formerly known as Renters Choice, Inc.), Comerica Bank, as
Documentation Agent, NationsBank N.A., as Syndication Agent, and
the Chase Manhattan Bank, as Administrative Agent, and certain
other lenders
10.4* -- Amended and Restated Credit Agreement, dated as of August 5,
1998 as Amended and Restated as of June 29, 2000, among
Rent-A-Center, Inc., Comerica Bank, as Documentation Agent, Bank
of America, NA, as Syndication Agent, and The Chase Manhattan
Bank, as Administration Agent
10.5(15) -- Guarantee and Collateral Agreement, dated August 5, 1998, made
by Renters Choice, Inc., and certain of its Subsidiaries in favor
of the Chase Manhattan Bank, as Administrative Agent
10.6(16) -- $175,000,000 Senior Subordinated Credit Agreement, dated as of
August 5, 1998, among Renters Choice, Inc., certain other lenders
and the Chase Manhattan Bank
10.7(17) -- Stockholders Agreement, dated as of August 5, 1998, by and
among Apollo Investment Fund IV, L.P., Apollo Overseas Partners
IV, L.P., J. Ernest Talley, Mark E. Speese, Renters Choice, Inc.,
and certain other persons
10.8(18) -- Agreements to be Bound to Stockholders Agreement, each dated
September 9, 1999, by and among Apollo Investment Fund IV, L.P.,
Apollo Overseas Partners IV, L.P., J. Ernest Talley, Mark E.
Speese, Rent-A-Center, Inc. and certain other persons.
10.9(19) -- Registration Rights Agreement, dated August 5, 1998, by and
between Renters Choice, Inc., Apollo Investment Fund IV, L.P., and
Apollo Overseas Partners IV, L.P., related to the Series A
Convertible Preferred Stock
10.10(20) -- Registration Rights Agreement, dated August 5, 1998, by and
between Renters Choice, Inc., Apollo Investment Fund IV, L.P., and
Apollo Overseas Partners IV, L.P., related to the Series B
Convertible Preferred Stock
</TABLE>
<PAGE> 21
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<S> <C>
10.11(21) -- Stock Purchase Agreement, dated August 5, 1998, among Renters
Choice, Inc., Apollo Investment Fund IV, L.P. and Apollo Overseas
Partners IV, L.P.
10.12(22) -- Exchange and Registration Rights Agreement, dated August 18,
1998, by and among Renters Choice, Inc. and Chase Securities Inc.,
Bear, Stearns & Co. Inc., NationsBanc Montgomery Securities LLC
and Credit Suisse First Boston Corporation
10.13(23) -- Employment Agreement, dated October 1, 1998, by and between
Rent-A-Center, Inc. and Bradley W. Denison
27.1* -- Financial Data Schedule
</TABLE>
----------
* Filed herewith.
(1) Incorporated herein by reference to Exhibit 2.9 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(2) Incorporated herein by reference to Exhibit 3.2 to the registrant's
Annual Report on Form 10-K for the year ended December 31, 1994
(3) Incorporated herein by reference to Exhibit 3.2 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1996
(4) Incorporated herein by reference to Exhibit 3.2 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1999
(5) Incorporated herein by reference to Exhibit 4.1 to the registrant's
Form S-4 filed on January 19, 1999.
(6) Incorporated herein by reference to Exhibit 4.2 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(7) Incorporated herein by reference to Exhibit 4.3 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(8) Incorporated herein by reference to Exhibit 4.4 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(9) Incorporated herein by reference to Exhibit 4.5 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(10) Incorporated herein by reference to Exhibit 4.6 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(11) Incorporated herein by reference to Exhibit 4.7 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(12) Incorporated herein by reference to Exhibit 99.1 to the registrant's
Registration Statement on Form S-8 (File No. 333- 40958)
(13) Incorporated herein by reference to Exhibit 10.18 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(14) Incorporated herein by reference to Exhibit 10.3 to the registrant's
Annual Report on Form 10-K for the year ended December 31, 1999
<PAGE> 22
<TABLE>
<S> <C>
(15) Incorporated herein by reference to Exhibit 10.19 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(16) Incorporated herein by reference to Exhibit 10.20 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(17) Incorporated herein by reference to Exhibit 10.21 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(18) Incorporated herein by reference to Exhibit 10.7 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1998
(19) Incorporated herein by reference to Exhibit 10.22 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(20) Incorporated herein by reference to Exhibit 10.23 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(21) Incorporated herein by reference to Exhibit 2.10 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(22) Incorporated herein by reference to Exhibit 10.14 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(23) Incorporated herein by reference to Exhibit 10.15 to the registrant's
Annual Report on Form 10-K for the year ended December 31, 1998
</TABLE>
----------
* Filed herewith.
